DANVILLE, Ky. — Vice President Joe Biden and Republican candidate Paul Ryan (R-Wis) contested in a vice presidential debate at Centre College at Danville, Kentucky Thursday night. In the debate moderated by ABC News' Martha Raddatz, small business tax policy became a point of disagreement.

Representative Ryan argued for the Obama administration not to raise taxes on small businesses. "President Obama thinks that the government ought to be able to take as much as 44.8 percent of a small business' income," said the GOP vice presidential candidate. He argued that it was useless to increase taxes on small businesses and the wealthy. He made a point that even if the government taxed all small businesses with bottom-line earnings over $250,000, there would be only sufficient taxes to run the government for 98 days. Representative Ryan summarized, "You see, there aren't enough rich people and small businesses to tax to pay for all their [Obama's] spending."

Vice President Biden chuckled, disbelieving of Ryan's statistics and argument. "97 percent of the small businesses of America pay less — make less than $250,000," he later retorted. "Let me tell you who some of those other small businesses are: hedge funds that make 6(00 million dollars), $800 million a year. That — that's what they count as small business because they're passthrough."

Ryan replied that the Obama administration would tax a million small businesses, in which Biden just wanted Americans to falsely believe that these were hedge fund firms or movie stars who earned millions.

Vice President Biden responded that the Administration planned to keep taxes low for small businesses. "Ninety-seven percent of the small businesses make less than $250,000 a year," he emphasized. "[The Obama tax plan] doesn't tax 97 percent of the American businesses — [namely] small businesses," he again stressed.

So who is right?

The Annenberg Public Policy Center's FactCheck.org of the University of Pennsylvania weighs in on what is correct and what's not. In short, FactCheck says that Biden is right.

"A $600-million-a-year hedge fund would indeed qualify as a 'small business' by Ryan's misleading definition," writes FactCheck. As evidence, it cites that as early as two years ago the Joint Committee on Taxation warned that thousands of S Corporations are in reality multimillion-dollar enterprises. "These figures for net positive business income do not imply that all of the income is from entities that might be considered 'small,'" the nonpartisan committee said in a 2010 study.

On the other hand, the nonpartisan fact checking organization said that there was some basis for Ryan's figure of 710,000 when he declared that taxing top earners more might cut 710,000 jobs from the U.S. economy. That's according to an Ernst & Young study from July commissioned by the Republican-leaning U.S. Chamber of Commerce and the National Federation of Independent Business. The study's model of economic forecasting showed "a loss of roughly 710,000 jobs" if Bush's federal tax cuts were allowed to expire on high income individuals.